Marks & Spencer customers licking their lips at the prospect of getting their food delivered through Ocado could be left high and dry following a warning that there will be “very limited” space for new shoppers.
M&S chairman Archie Norman sounded alarm bells to investors during the retailer’s virtual annual general meeting that its upcoming £750m joint venture with Ocado will see swathes of customers struggle to place orders.
Norman said the soaring demand for Ocado during lockdown meant the company is continuing to operate “at capacity” and will not be able to serve many new customers when the joint venture finally launches in September.
The move comes despite M&S claiming at the time the deal was struck that the Ocado partnership will double its food sales.
Norman said: “Ocado during the crisis has been in huge demand, because existing Ocado customers have been trying to increase their orders and additional people have been trying to get on to the delivery circuit.
“As a result, because they distribute out of these huge robotic warehouses they are right now operating at capacity, so we can’t say how much scope there will be for new M&S customers or shareholders. But it is likely to be very limited.”
Ocado saw sales jump by up 91% during lockdown and in June it achieved its highest ever market share of 1.7%. However, the delivery firm has faced criticism from existing customers for its inability to meet demand for its services, triggering a groveling apology.
Chief executive Mel Smith told customers in a blog over the weekend that she was aware customers were struggling to secure delivery slots while in lockdown. “No matter how hard we work, we simply do not have the capacity right now to meet all the demand we are seeing from existing customers, let alone new ones,” she said.
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